A doomsday scenario? (And a way out)

(This post was written just a few days before the announced deal between the AMPTP and the DGA)

As the WGA strike enters its third month without any apparent progress at the bargaining table I think it is appropriate to contemplate some pretty serious scenarios. Assume the DGA cuts a deal that is weaker than what the WGA last had on the table. Fearing that waiting for SAG’s negotiations to get underway months later is intolerable, the WGA folds its tent and takes a “me too” approach and the strike collapses.

Aftra meanwhile refuses to give up its right to 50% of the seats on the joint bargaining committee with SAG so SAG defaults on the arrangement and enters into direct bargaining with the Producers. The NY SAG reps refuse to participate or are regularly outvoted on the committee and SAG leads the actors into a round of bargaining that either leads to accepting the same low rent DGA deal or into a strike that ends months later without any better deal in hand. A round of FiCore follows and the NY SAG breaks away and forms an independent union. Aftra and the IA merge and Hollywood SAG leaves the AFL-CIO to become an independent association. Meanwhile A-level stars begin to leave the union altogether and a downward spiral begins in an industry that could and should be a shining example of success for organized labor in the post-manufacturing global era.

This may be a bit of an overstatement of the situation but it is not altogether far fetched. And it may be precisely the kind of scenario that the AMPTP is dreaming about. But it can be avoided. To do so the admirable energy brought into the guilds over the last few years has to be turned in a different direction. I think the problem at its core is simple: the talent guilds are attempting to fight the last war – the industry is changing dramatically but the strategy and tactics of labor in the entertainment industry are not.

Here is one way to get at the problem: in the entertainment and media industry, every single existing dollar of revenue is already subject to a legal claim by one party or another, to every single penny. The only money that is not yet subject to a legal claim is money that in a sense does not yet exist from the new revenues that will be earned (in the billions and billions) over the next generation through new media and digital distribution. Thus, labor unions that try to focus on how to squeeze more out of current revenue streams may succeed in modest terms but it will be like squeezing blood from a stone.

This is, in a sense, what the WGA is trying to do despite the apparent focus on potential revenue from the internet – they are using the appearance of militancy – well organized picket lines, rallies with Jesse Jackson, lots of clever and creative You Tube videos. But there is little evidence that the Producers are feeling any real pain. Even the LA Times recently editorialized that the WGA needs to get its act together and go for the jugular – of course, they were shy on the details. But they made the right point – you have to be willing to go for the jugular to get the other side to take you seriously.

But the question is how do you make the producers feel the pain? Go back to my point about the existing claims to revenue in the industry. Existing revenue is spoken for – in lopsided ways that hurt most members of the guilds and even the IA, and so one can try restructure those cash flows but it is very hard to make people give up what they already feel entitled to.

So that leaves the new revenues that will start flowing through new media and digital distribution. That must be the focus if the guilds are to survive and prosper for the next generation. But what is the dynamic at work today, in the WGA strike, for example? In a sense the AMPTP is doing the lord’s work for the new digital era employers – from the majors in Hollywood to their new partners in the technology world and the telecom and cable world and on Wall Street where billions are flowing into the entertainment sector in anticipation of a huge payoff. So while the WGA has won the PR war in the opening months of the strike on Main Street, the producers (and here I mean the Rupert Murdoch’s of the world not just his LA front men at the bargaining table) have the backing of major segments of the new digital economy who understand the stakes – the folks on Wall Street and in Silicon Valley.

It is not enough to put pressure just on the studios. They no longer run the show. They are partners in a much larger industrial network connecting Hollywood with Silicon Valley and Wall Street. Therefore, the pain must be felt throughout that entire network, otherwise the guilds cannot succeed in doing anything but win modest improvements in the revenue stream. If they settle for that it will be a relatively short period of time when the membership realizes that they have lost as much from new media as they have from DVD revenues.

What would an alternative approach look like? First, it starts with a map of all the forces at play here – not just those formally at the bargaining table. Unions do not win real contract gains at the bargaining table – that is only where the results of an effective strategy are ratified. And the strategy must engage all of the major players on that map. Second, the implementation of pressure on all of those players so that it is clear to them that the guilds understand the new industrial structure and are determined to win their share of the new revenues.

One small illustrative example of the potential of this approach: the Consumer Electronics Show (CES) took place in Las Vegas this past week. The CES is a massive and widely followed showcase for the new media world – it is in a sense the Oscars for that world – and as I have said ad nauseam that world is now critical to Hollywood, which had a significant presence there as well. Many of the presentations were about new technologies and companies that are shaping the new media/digital environment. And by “shaping” I mean cutting deals with Hollywood and Wall Street that do not include the Guilds – that is, they are carving up the pie and the Guilds are not at the table to get their fair share.

Now, Las Vegas is, believe it or not, a union town, where unions that are friendly to the talent guilds have a heavy presence, including SEIU (Andy Stern recently supported the WGA when the AMPTP hired PR consultants who had worked with labor) and UNITE-HERE (which reps all the casino employees and hotel workers). What if the WGA had worked with those unions to stage major demonstrations at the CES, designed at a minimum to be seen and heard everywhere or at a maximum to have shut down the CES altogether? The media coverage would have been terrific. It would have brought the fight into the heart of the new media world and, most importantly, it would have literally disrupted hundreds of deals in the works where the guilds have been excluded. That is how you cause “pain” (in the words of the LA Times) and make the other side begin to take you seriously – when you demonstrate that you know how the game is now being played and you are going to play as smart and tough as they do.

This is a small example of the kind of tactic that will be necessary to put pressure on the silent partners of the producers in the technology world. There are many other examples that could be developed and that could also be applied in the financial world. The point is that the focus must change to the actual terrain upon which the guilds’ members are now living and working.